Like any other loan, a cosigner on a mortgage means that the person is binding himself to be legally obligated to make the debt payments should you default. So, if you have your mom cosign on your mortgage and you default, she’s on the hook legally and will have to make payments. Similarly, if she wants to get off your mortgage, she can’t do so without you refinancing. If a cosigner is required, the lender is effectively saying that your financial history isn’t good enough and they want someone else to be on the hook, too.
Do some research online, but work with a live person who can review your situation, answer questions and, if necessary, suggest how you can improve your credit.“Online calculators do not always include insurance and taxes or PMI [private mortgage insurance required if the down payment is less than 20%] and are not always an accurate picture of what the payment or actual fees for the loan are,” says Anita Wagoner Brown, director of sales and marketing for Home Creations, the largest new home builder in Oklahoma.
What to consider instead: You can put as little as 3 percent down for a conventional mortgage (note: you’ll pay mortgage insurance). Some government-insured loans require 3.5 percent down or zero down, in some cases. Plus, check with your local or state housing programs to see if you qualify for housing assistance programs designed for first-time buyers.
One of the most crippling headaches to deal with is a monthly mortgage payment you find you can’t quite afford. Lysette Portales, a real estate agent with Century 21 Jim White & Associates in Treasure Island, Florida, says she stresses to clients that they should shop around for a mortgage with multiple lenders and inquire with each about different program options. “A lot of them might be able to do 100 percent [financing],” she says, noting that many homebuyers typically only know about a couple mortgage programs and settle for one without considering what would be most affordable option both now and down the line.
"This investment shouldn’t be entered into without someone who knows the market, the neighborhood, local trends, specific values, and how to navigate the process," says George Lawton, licensed real estate agent with RE/MAX Over the Mountain in Birmingham, AL. "A Realtor who is your advocate and is looking out for your needs can simplify this process and make it enjoyable. But don’t just hire your neighbor’s mom who does this part time for Christmas money. Interview a few that are recommended by friends and family and see who you feel most comfortable with. You may be working together for months, and you want it to be a good relationship."
PMI stands for private mortgage insurance. As part of qualifying for a conventional loan, you will have to get PMI if you put down less than 20%. Once your equity in your home reaches 20%, you can get the PMI removed (lowering your monthly mortgage payment). However, with an FHA loan, the insurance stays on the loan for the life of the loan, regardless of the equity in the loan. The private insurance on an FHA loan is called mortgage insurance premium (MIP). There is no way to avoid MIP on an FHA loan.

Homeowners insurance is a contract that protects both you and your lender in case of loss or damage to your property. The contract is known as an insurance policy, and the periodic payment is known as an insurance premium. The monthly homeowners insurance premium is often included as part of the monthly mortgage payment, with the insurance portion of the payment going into your escrow account.
When you’ve selected a Realtor, start searching in earnest for your new home. Your real estate agent will find properties that he or she thinks you may like, but you can also search on your own. Check out internet listings, drive around and look for yard signs, and ask around to learn about houses that may be available in the neighborhoods you want. In a seller’s market, where available properties may be limited, try to exhaust all your options—not just Trulia, Zillow, and whatever your Realtor sends your way.
One of the ways your lender makes sure you and your house are a good bet is with a home appraisal. This is when someone does a professional evaluation of how much your home is worth. If the appraisal ends up higher than your offer, go celebrate. If it’s not, you may either have to make a larger down payment, get a second opinion, or renegotiate the price. Or you may decide to walk away from the deal.​
No one loves shelling out money for unexpected expenses, but sometimes that seems like a rite of passage in homeownership. “Most of the time, the unhappy surprises are simply due to people being unaware of the things that can crop up,” says Brad Hunter, chief economist for HomeAdvisor. First-time homebuyers in particular may not know what to expect after closing on a home, and there’s nothing worse than developing buyer’s remorse about one of the largest investments you’ll ever make. Here are eight headaches to prepare for if you’re looking to purchase a house.
“The time to confirm that the Bank of Mom and Dad is ready, willing and able to provide you with help for your down payment is before you start home shopping,” says Dana Scanlon, a realtor with Keller Williams Capital Properties in Bethesda, Maryland. “If a buyer ratifies a contract to purchase a home with an understanding that they will be getting gift money, and the gift money fails to materialize, they can lose their earnest money deposit.”
No one loves shelling out money for unexpected expenses, but sometimes that seems like a rite of passage in homeownership. “Most of the time, the unhappy surprises are simply due to people being unaware of the things that can crop up,” says Brad Hunter, chief economist for HomeAdvisor. First-time homebuyers in particular may not know what to expect after closing on a home, and there’s nothing worse than developing buyer’s remorse about one of the largest investments you’ll ever make. Here are eight headaches to prepare for if you’re looking to purchase a house.
If you already own a home, simply call your insurance agent and let them know you’re buying a new home. They will handle writing a new policy. If you don’t have an insurance agent, now’s the time to find one because your lender will require homeowners insurance. Even if you don’t have a mortgage, insurance is a critical part of protecting your investment. You’ll also want to give utility companies your move-in date to establish service. There’s nothing like moving into a cold, dark house because you didn’t get an account with the power company!
FHA Loans – FHA loans are the most popular type of home loan used by first-time homebuyers. This is because they are easier to qualify for and have a low 3.5% down payment. FHA home loans allow for higher DTI ratios making it easier to qualify for a home loan with low income. They also have the lowest credit score requirement of any mortgage, you need just a 580 credit score with 3.5% down.
Speaking of mortgages, Gilmour recommends that payments generally not exceed 28% of your monthly gross income—but if you have other high costs, such as private school tuition, it can be wise to pare down this percentage even more. If you're not sure what's realistic, consider seeking help from a financial professional, who can help walk you through an appropriate breakdown, based on your individual situation.

Need help finding an expert you can trust with such an important purchase? Check out our Endorsed Local Provider (ELP) program. We only recommend real estate agents who close 35 home transactions per year or close more home transactions than 90% of the agents in their market (among other qualifications). Trust me, these pros are the best! Find an agent now!
2) Figure out how much home you can afford. Remember, just because the mortgage company will loan you the money doesn't mean you should take it. There are rules of thumb like not spending more than 28% of your income on mortgage payments, but every person's situation is different. Two people may have the same income, but one may need to save more for retirement or choose to make large private school tuition payments for their kids. Take a look at your current saving and spending needs to see how much you can realistically afford to pay each month and don't forget to leave some room for the potential "hidden expenses" of home ownership like utility bills, HOA fees if applicable, repairs and maintenance.
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